Page 21 - Insurance Times April 2024

How Indian Insurer

can study customer

behavior for better

insurance offerings

amidst provision of Sanchit Mittal

Union Budget 2024

"The industry's central purpose is evolving from loss reimbursement to risk solutions. Insurers have
an opportunity to redefine their role by encouraging behaviors that reduce risks. Insurers can
incentivize policyholders who exhibit good behaviors, fostering a mutually beneficial relationship.
Policyholder can be low income but good behavior or be high income and bad behavior."

T he landscape of insurance is evolving, with both 3. Value for Stakeholders
policyholders and insurers playing pivotal roles. As
This paradigm shift delivers significant value to both in-
we delve into the intricacies of this dynamic rela-
surers and policyholders:
tionship, it becomes evident that understanding
customer behavior is paramount for creating tailored insur- 3.1 For Insurers:
Enhanced Brand Reputation: By aligning offerings with
ance solutions. Here's how insurers can harness behavioral customer behavior, insurers build trust and credibility.
insights to optimize their offerings:
1. Addressing Policyholder Needs Lower Claim Ratios: Proactive risk management re-
duces claim frequency and severity.
Policyholders seek protection against risks associated
with health, motor vehicles, and financial well-being. Regulatory Compliance: Adapting to behavioral insights
Factors such as an aging population, inflation, and the ensures compliance with evolving regulations.
aftermath of the COVID-19 pandemic have intensified Policyholder Engagement & Satisfaction: Customized
these concerns. For insurers, the challenge lies in not products enhance overall satisfaction.
only mitigating risks but also preventing them.
3.2 For Policyholders:
2. Income Plus Behavior: A Paradigm Shift Quality of Life: Tailored insurance positively impacts
Traditionally, insurers segmented customers based on policyholders' well-being.
income. However, the landscape has evolved. Today, it's
about "Income plus behavior." Customer behavior di- Proactive Lifestyle Changes: Behavioral insights em-
rectly influences pricing strategies. Insurers can tailor power individuals to make informed decisions.
premiums based on how policyholders manage their Financial Well-Being: Customized offerings align with
finances, retire, and plan for the future. policyholders' financial goals.

20 April 2024 The Insurance Times